US Appeals Court declined to allow Trump to remove Federal Reserve Governor Cook; Cook can attend the FOMC’s September 16th-17th meeting.
US Senate voted 48-47 to confirm US President Trump’s Fed nominee Miran to join the Fed board.
European bourses opened flat but sentiment dipped a touch to display a mostly negative picture; US equity futures are modestly firmer; NVDA little moved on reports of “lukewarm” demand for its RTX6000D AI chip.
DXY in the doldrums as the clock ticks down to the FOMC; GBP was little moved to an in-line Jobs Report.
USTs are essentially flat into Retail Sales and supply; Bunds pressured following ZEW and a relatively soft German auction.
Crude futures slip with reports of the 19th sanctions package delayed; XAU makes a fresh ATH.
Looking ahead, US Retail Sales (Aug) and Industrial Production (Aug), Import Prices (Aug), Atlanta Fed GDP, Canadian CPI (Aug) & ECB’s Escriva, Supply from the US.
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TARIFFS/TRADE
US President Trump said he is undecided regarding a TikTok stake, and he will speak with Chinese President Xi about a significant agreement, while he believes discussions with Xi will confirm key matters.
US opened an inclusions window for the section 232 on steel and aluminium in which the Bureau of Industry and Security established a process for including additional derivative steel and aluminium articles within the scope of the duties authorised by the President under section 232 of the Trade Expansion Act of 1962.
Playbook citing officials reports that the forum for any UK-US talks on steel/aluminium would be a bilateral meeting, however as of Monday night there was reportedly no sign of a sit-down between UK Chancellor Reeves and US Treasury Secretary Bessent.
EUROPEAN TRADE
EQUITIES
European bourses (STOXX 600 -0.1%) opened around the unchanged mark, but sentiment then slipped as markets turned risk-off across the board in the continent. That pressure has since slowed down a little and are off worst levels – but indices are still broadly lower.
European sectors are broadly on the backfoot, in-fitting with the risk tone. IT is towards the top of the pile, boosted by strength across Dutch semiconductor names; nothing really driving the upside today, but it does come after ASML (+3%) once again overtook SAP, to become Europe’s largest company. Consumer Staples is found towards the bottom of the pile; Unilever (-1%) moves lower after it appointed a new CFO.
US equity futures (ES +0.2%, NQ +0.2%, RTY +0.2%) are incrementally firmer today, continuing the upside seen in the prior session, ahead of US Retail Sales.
NVIDIA (NVDA) RTX6000D AI chip for China meets only lukewarm demand with some major tech firms opting not to place; chip not seen as cost-effective, better card can be found on the grey market, according to Reuters sources.
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FX
DXY is on the backfoot; currently trading towards lows of 96.96 Another weak start of the session for the index which remained subdued in APAC hours after weakening yesterday alongside softer US yields and with the greenback not helped by a drop in the NY Fed Manufacturing Survey. Participants now await Industrial Production and Retail Sales data scheduled later today, while the FOMC will also begin its 2-day policy meeting which will be attended by Fed’s Cook and Miran, after a US Appeals Court denied the Justice Department’s request to put on hold a judge’s ruling temporarily blocking Trump from removing Cook, and the US Senate confirmed Miran to join the Fed board.
EUR/USD mildly benefits from recent dollar weakness and after ECB officials reiterated that interest rates are in a good place. In data, EUR held onto gains following mixed German ZEW survey (Economic Sentiment beat and surprisingly improved but Current Conditions missed and deteriorated), whilst the EZ metrics improved. EUR/USD eventually eclipsed 1.1800 to a current high at 1.1817.
USD/JPY is softer amid USD weakness and broader JPY strength, with analysts at ING attributing some of the JPY upside to “the more moderate Shinjiro Koizumi is entering the LDP leadership race against Sanae Takaichi, who is seen as yen bearish for her views on loose monetary and fiscal policy.” USD/JPY found resistance near its 21 DMA (147.65) to trade in a current range between 146.69-147.54.
GBP is benefitting from broader dollar weakness and ahead of US President Trump’s state visit to the UK, with a presser (likely joint) due on Thursday before the US leader’s departure. UK jobs data this morning were largely in line, but a slightly above-forecast employment change prompted a couple of pips of upside in cable, but nothing to write home about. Pricing remains unchanged with markets firmly expecting no change at the BoE this Thursday, with some 97% chance of a hold. Cable trades in a 1.3598-1.3642 range.
Antipodeans trade rangebound with a slightly softer bias and following an uneventful APAC session. Comments from RBA’s Hunter and Hauser provided little to shift the dial – the former noted they are close to getting inflation to the target and that risks around the outlook are balanced.
PBoC set USD/CNY mid-point at 7.1027 vs exp. 7.1159 (Prev. 7.1056).
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FIXED INCOME
USTs are flat, awaiting the FOMC on Wednesday, but before that, we have a Tier 1 release in the form of retail sales. Expected at +0.2% M/M in August (prev. 0.5%), while the ex-autos measure is seen rising +0.4% M/M, matching the July reading, and the Retail Control group is seen +0.4% M/M (prev. +0.5%). Thereafter, issuance in focus with a 20yr Bond auction scheduled. No concession seen in trade this morning, but that could change in the hours ahead. Elsewhere, the composition of the Fed remains in focus as Cook will remain on the board for at least the September meeting following a court update. Additionally, White House official Miran has been formally approved and will be partaking in the September meeting. Currently, USTs reside in a very thin 113-11 to 113-16 band.
Bunds are in-fitting with peers throughout the European morning. Gapped higher around the cash equity open, seemingly as a function of the pressure seen in the equity space around this point. German ZEW for September was mixed. Economic sentiment came in above consensus and seemingly spurred some modest pressure in Bunds with financial market experts cautiously optimistic. However, the current situation has deteriorated amid ongoing US tariff concern and into the German fiscal reform window. As such, Bunds quickly retraced that pressure and are back to pre-release levels. Thereafter, a weaker-than-prior German 2030 auction spurred another bout of pressure in Bunds, back towards earlier lows of 128.54.
Gilts are modestly lower. No significant follow-through from the morning’s jobs data. Overall, the release was broadly in-line with consensus with the labour market continuing to cool though the pace of this is seemingly beginning to slow. While the continued slowing is arguably a dovish sign, it is counteracted by the (as expected) uptick in wages, which remain at levels likely inconsistent with inflation sustainably settling at target over the medium term. Note, the next CPI release is Wednesday, where the headline Y/Y is expected at 3.8% (prev. 3.8%). Elsewhere, supply was soft. A sub-3x cover and a chunky tail, reminiscent of the auction before last. Results of this sent Gilts lower by just under 10 ticks, but comfortably within existing parameters. Gilts opened the morning unchanged from Monday’s close at 91.47, before briefly dipping to a 91.31 low and then retracing to a 91.57 peak.
UK sells GBP 3bln 4.375% 2040 Gilt: b/c 2.95x (prev. 3.69x), average yield 5.048% (prev. 5.066%) & tail 0.9bps (prev. 0.1bps)
Germany sells EUR 3.491bln vs exp. EUR 4.5bln 2.20% 2030 Bobl: b/c 1.70x (prev. 1.90x), average yield 2.29% (prev. 2.32%) & retention 22.42% (prev. 23.19%)
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COMMODITIES
Subdued trade in the crude complex with aggressive losses seen around the time of the European cash equity open which also came despite USD weakness. One of the bearish factors could be reports that the 19th EU sanctions package against Russia is no longer expected to be presented on Wednesday, via Politico citing an EU diplomat (since corroborated by other reports); no detail on when the sanctions would be unveiled. WTI currently resides in a USD 62.89-63.55/bbl range while Brent sits in a USD 67.01-67.68/bbl range.
Spot gold holds an upward bias as it continues printing fresh records on its way to USD 3,700/oz against the backdrop of a softer dollar and heightened geopolitics. Spot gold currently resides in a USD 3,674.70-3,697.40/oz range with the top end of the band the latest all-time high.
Base metals are mostly softer despite the softer dollar and gains in US futures, albeit the mood in Europe is slightly more mixed. 3M LME copper holds above USD 10k/t and resides in a USD 10,087.90-10,177.70/t range at the time of writing.
Commerzbank revises its gold price forecast upward to USD 3,600/oz for end-year; raises silver year-end forecast for 2025 to USD 41/oz and 2026-end forecast to USD 43/oz.
Thai Central Bank says they have discussed tax on gold trades; to support gold trades in Dollars; other measures on gold trades were discussed.
Ukraine’s military says it struck Russia’s Saratov oil refinery (140k BPD) in overnight attack.
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NOTABLE DATA RECAP
UK ILO Unemployment Rate (Jul) 4.7% vs. Exp. 4.7% (Prev. 4.7%); Employment Change (Jul) 232k vs. Exp. 220k (Prev. 238k)
UK Avg Wk Earnings 3M YY (Jul) 4.7% vs. Exp. 4.7% (Prev. 4.6%); Ex-Bonus (Jul) 4.8% vs. Exp. 4.8% (Prev. 5.0%)
UK HMRC Payrolls Change (Aug) -8k (Prev. -8k, Rev. -6k); Claimant Count (Aug) 17.4k (Prev. -6.2k, Rev. -33.3k)
Italian CPI (EU Norm) Final YY (Aug) 1.6% vs. Exp. 1.7% (Prev. 1.7%); Consumer Prices Final YY (Aug) 1.6% vs. Exp. 1.6% (Prev. 1.6%); Consumer Prices Final MM (Aug) 0.1% vs. Exp. 0.1% (Prev. 0.1%); CPI (EU Norm) Final MM (Aug) -0.2% vs. Exp. -0.2% (Prev. -0.2%)
German ZEW Economic Sentiment (Sep) 37.3 vs. Exp. 26.3 (Prev. 34.7)
German ZEW Current Conditions (Sep) -76.4 vs. Exp. -75.0 (Prev. -68.6)
EU ZEW Survey Expectations (Sep) 26.1 (Prev. 25.1)
EU Industrial Production MM (Jul) 0.3% vs. Exp. 0.4% (Prev. -1.3%)
EU Industrial Production YY (Jul) 1.8% vs. Exp. 1.7% (Prev. 0.2%)
EU Wages In Euro Zone (Q2) 3.7% (Prev. 3.4%)
EU Labour Costs YY (Q2) 3.6% (Prev. 3.4%)
NOTABLE EUROPEAN HEADLINES
ECB’s Villeroy says French growth is not strong enough, but remains positive.
NOTABLE US HEADLINES
US Senate voted 48-47 to confirm US President Trump’s Fed nominee Miran to join the Fed board.
US Appeals Court declined to allow Trump to remove Federal Reserve Governor Cook, in which it denied the Justice Department’s request to put on hold a judge’s ruling temporarily blocking Trump from removing Cook, while the ruling for now clears the way for Cook to attend the FOMC’s September 16th-17th meeting.
US President Trump said Congressional Republicans are working on a short-term clean extension of government funding to stop Senate Minority Leader Schumer from shutting down the government.
US President Trump signed a Presidential Memorandum to establish the Memphis Safe Task Force which was said to be a replica of efforts in Washington DC and will include the National Guard. Furthermore, Trump stated they are probably going to go in Chicago next and want to get to New Orleans, while he also commented that they need to save St. Louis.
US reportedly looks to boost national strategic uranium stockpile, according to Bloomberg.
GEOPOLITICS
MIDDLE EAST
Israel has launched its ground incursion into Gaza City, two Israeli officials told CNN early Tuesday; One of the officials said the ground incursion is going to be “phased and gradual” at the beginning.
Israel military official says will be increasing the amount of troops into Gaza city as the days go by.
US President Trump said Israel won’t be attacking Qatar.
US President Trump posted about Hamas moving hostages above ground to use them as human shields and stated “I hope the Leaders of Hamas know what they’re getting into if they do such a thing. This is a human atrocity, the likes of which few people have ever seen before. Don’t let this happen or, ALL “BETS” ARE OFF. RELEASE ALL HOSTAGES NOW!”
US Secretary of State Rubio said before heading to Qatar, that they hope Qatar will re-engage on Gaza talks despite everything that’s happened, while he added that they have a very short window in which a deal on Gaza can happen and that they are on the verge of finalising an enhanced defence cooperation agreement with Qatar.
RUSSIA-UKRAINE
Polish government is boosting its cyber security budget to a record EUR 1bn this year, after Russian sabotage attempts targeted hospitals and urban water supplies, according to FT.
Japanese Finance Minister Kato said Japan pledged to comply with WTO rules, but will consider measures to raise pressure on Russia and coordinate with G7 countries, when asked about US requests to G7 for higher sanctions on India and China for buying Russian oil.
The 19th EU sanctions package against Russia is now off the agenda for Wednesday’s EU ambassadors meeting, no new date has been set, via an EU official. Confirmation of earlier reporting via Politico
Russia says its drones have struck a Ukrainian gas distribution station reportedly used by the military.
CRYPTO
Bitcoin is a little firmer today and trades around USD 115.5k whilst Ethereum moves a bit lower to a current USD 4.5k.
APAC TRADE
APAC stocks traded mixed amid some cautiousness ahead of upcoming risk events and despite the fresh record levels on Wall St, where the mega-caps did most of the lifting as Alphabet joined the USD 3tln market cap club.
ASX 200 marginally gained with the index led by strength in mining, resources and materials, but with gains capped by weakness in defensives.
Nikkei 225 swung between gains and losses following an early unprecedented climb to above the 45,000 milestone on return from the extended weekend, while the calendar was quiet, although lower US tariffs on Japan took effect.
Hang Seng and Shanghai Comp were subdued despite the recent talks in Madrid where the US and China reached a framework agreement on TikTok although the details were scarce, while US President Trump and Chinese President Xi are scheduled to talk on Friday.
NOTABLE ASIA-PAC HEADLINES
Japan’s Finance Minister Kato reiterated it is not appropriate to lower the consumption tax and he has decided to support Agricultural Minister Koizumi in the LDP leadership race.
China is issuing measures on increasing consumption, according to Xinhua. Will launch a series of consumption promotion activities. Will enhance supply of quality services. Will promote an orderly opening up of sectors including the internet and cultures. Will expand pilots in telecoms, medicine and education sectors. Will extend business hours for tourist sites and museums. Will increase consumption credit support. Will coordinate funding channels, including local government special bonds, for new cultural and tourism facilities.
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